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Structural Change and the Kaldor Facts of Economic Growth

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  • Foellmi, Reto
  • Zweimüller, Josef

Abstract

We present a model in which two of the most important features of the long-run growth process are reconciled: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. We assume that households expand their consumption along a hierarchy of needs and firms continuously introduce new products. In equilibrium industries with an expanding and those with a declining employment share co-exist, and each such industry goes (or has already gone) through a cycle of take-off, maturity, and stagnation. Nonetheless macroeconomic aggregates grow pari passu at a constant rate.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3300.

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Date of creation: Apr 2002
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Handle: RePEc:cpr:ceprdp:3300
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Keywords: balanced growth; demand externalities; hierarchic preferences; innovation; Kaldor facts; multiple equilibria; structural change;

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Find related papers by JEL classification:
  • D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
  • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
  • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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  1. Stephen L. Parente & Edward C. Prescott, 2004. "A unified theory of the evolution of international income levels," Staff Report 333, Federal Reserve Bank of Minneapolis.
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Cited by:

  1. Jaime Alonso-Carrera & Xavier Raurich, 2006. "Growth, Sectoral Composition, and the Wealth of Nations," Working Papers 278, Barcelona Graduate School of Economics.
  2. Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," 2006 Meeting Papers 207, Society for Economic Dynamics.
  3. L. Rachel Ngai & Christopher Pissarides, 2004. "Structural change in a multi-sector model of growth," LSE Research Online Documents on Economics 3550, London School of Economics and Political Science, LSE Library.
  4. Trevor Tombe, 2012. "Structural Change and Regional Convergence: The Case of Declining Transport Costs," Working Papers tt0061, Wilfrid Laurier University, Department of Economics, revised 2012.
  5. Tombe, Trevor, 2010. "Regions, frictions, and migrations in a model of structural transformation," MPRA Paper 26641, University Library of Munich, Germany.
  6. Katarzyna Rosiak-Lada, 2008. "Stylized Facts of Macroeconomics: the Polish Experience," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 20.
  7. Bonatti, Luigi & Felice, Giulia, 2008. "Endogenous growth and changing sectoral composition in advanced economies," Structural Change and Economic Dynamics, Elsevier, vol. 19(2), pages 109-131, June.
  8. Matteo Lucchese, 2011. "Innovation, demand and structural change in Europe," Working Papers 1109, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
  9. Nilsson, Desirée, 2007. "Changing Export Structure According to Income Elasticity - Kaldor revisited," Working Paper Series in Economics and Institutions of Innovation 92, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  10. Andrés Maroto-Sanchez, 2010. "Growth and productivity in the service sector: The state of the art," Working Papers 07/10, Instituto Universitario de Análisis Económico y Social.
  11. Reto Foellmi & Josef Zweimuller, 2006. "Income Distribution and Demand-Induced Innovations," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 941-960.

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